Wednesday, February 25, 2009

Good news for any of the mass affluent in the market for a new home. The FHA has increased the loan limits of its loan guarantee program. Insured mortgages equals lower rates. (To see what I mean, compare the differences in rates between jumbo mortgages and insured mortgages.)

The stimulus bill allows FHA, Fannie Mae and Freddie Mac to guarantee loans of up to 125 percent of the median home price in high-cost markets, up to a maximum of $729,750 for one-unit properties. The cap for two-unit properties is $934,200; three-unit properties is $1,129,250; and four-unit properties is $1,403,400.

What are the high-cost markets? You can find the list on the FHA Web site (it's an Excel spreadsheet). Basically, the markets center around the major U.S. cities; New York, D.C., Los Angeles, Denver. etc.